FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
QUARTERLY OR TRANSITIONAL REPORT
(As last amended by 34-32231, eff. 6/3/93.)
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period.........to.........
Commission file number 0-14283
ANGELES INCOME PROPERTIES LTD. IV
(Exact name of small business issuer as specified in its charter)
California 95-3974194
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification
No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (803) 239-1000
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) ANGELES INCOME PROPERTIES. LTD. IV
CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
September 30, 1995
<S>
Assets <C> <C>
Cash:
Unrestricted $ 3,466,854
Restricted--tenant security deposits 7,589
Accounts receivable, net of an allowance of $110,267 426,021
Escrow deposits for taxes 169,315
Other assets 1,374,359
Investment properties:
Land $ 2,707,811
Buildings and related personal property 19,849,856
22,557,667
Less accumulated depreciation (10,173,794) 12,383,873
$ 17,828,011
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 28,745
Tenant security deposits 7,509
Accrued taxes 122,902
Other liabilities 160,776
Mortgage note payable 14,541,605
Equity interest in net liabilities of
joint ventures 17,094,745
Partners' Deficit
General partner $ (1,421,545)
Limited partners (131,760
units issued and outstanding) (12,706,726) (14,128,271)
$ 17,828,011
</TABLE>
[FN]
See Accompanying Notes to Consolidated Financial Statements
b) ANGELES INCOME PROPERTIES, LTD. IV
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 923,628 $ 707,174 $ 2,647,437 $ 2,320,835
Other income 79,472 10,154 152,984 34,195
Total revenue 1,003,100 717,328 2,800,421 2,355,030
Expenses:
Operating 211,038 250,047 634,131 742,006
General and administrative 99,126 119,881 313,154 544,137
Property management fees 55,189 37,045 130,081 115,685
Maintenance 84,906 65,135 251,090 208,973
Depreciation 276,258 287,101 828,002 845,930
Amortization 18,714 17,167 55,074 53,744
Interest 370,411 376,093 1,116,317 1,132,539
Property taxes 53,406 54,176 160,240 164,793
Bad debt expense 670,867 11,900 725,877 66,759
Bad debt recovery (150,000) -- (2,111,437) --
Tenant reimbursements (646,571) (203,849) (1,053,247) (782,408)
Total expenses 1,043,344 1,014,696 1,049,282 3,092,158
(Loss) income before
equity in loss of
joint ventures (40,244) (297,368) 1,751,139 (737,128)
Equity in loss of
joint ventures (729,004) (617,639) (937,177) (1,850,405)
Net (loss) income $ (769,248) $ (915,007) $ 813,962 $(2,587,533)
Net (loss) income allocated
to general partners (2%) $ (15,385) $ (18,300) $ 16,279 $ (51,751)
Net (loss) income allocated
to limited partners (98%) (753,863) (896,707) 797,683 (2,535,782)
Net (loss) income $ (769,248) $ (915,007) $ 813,962 $(2,587,533)
Net (loss) income per
limited partnership unit $ (5.72) $ (6.80) $ 6.05 $ (19.24)
</TABLE>
[FN]
See Accompanying Notes to Consolidated Financial Statements
c) ANGELES INCOME PROPERTIES, LTD. IV
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT - September 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partner Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 131,800 $ 1,000 $ 65,900,000 $ 65,901,000
Partners' deficit at
December 31, 1994 131,760 $(1,437,824) $(13,504,409) $(14,942,233)
Net income for the nine months
ended September 30, 1995 -- 16,279 797,683 813,962
Partners' deficit at
September 30, 1995 131,760 $(1,421,545) $(12,706,726) $(14,128,271)
</TABLE>
[FN]
See Accompanying Notes to Consolidated Financial Statements
d) ANGELES INCOME PROPERTIES, LTD. IV
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 813,962 $(2,587,533)
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities:
Equity in income of joint ventures 937,177 1,850,405
Depreciation 828,002 845,930
Bad debt expense 725,877 66,759
Amortization of loan costs and leasing
commissions 86,377 83,472
Change in accounts:
Restricted cash 557 (2,231)
Accounts receivable (409,137) 83,571
Escrows for taxes 1,023 (75,587)
Other assets (2,812,370) (362,081)
Accounts payable (10,066) (60,847)
Tenant security deposit liabilities (637) 1,077
Accrued taxes (9,472) (8,701)
Other liabilities (14,369) (108,332)
Net cash provided by (used in)
operating activities: 136,924 (274,098)
Cash flows from investing activities:
Capital improvements (89,296) (374,640)
Distributions from joint venture 965,730 --
Proceeds from note receivable - Fort Worth 2,111,437 --
Net cash provided by (used in)
investing activities 2,987,871 (374,640)
Cash flows used in financing activities:
Payments on mortgage notes payable (206,159) (186,826)
Net increase (decrease) in cash 2,918,636 (835,564)
Cash at beginning of period 548,218 1,454,522
Cash at end of period $3,466,854 $ 618,958
Supplemental disclosure of cash flow information
Cash paid for interest $1,085,014 $ 1,104,347
</TABLE>
[FN]
See Accompanying Notes to Consolidated Financial Statements
e) ANGELES INCOME PROPERTIES, LTD. IV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Item 310(b) of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of the General Partner, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the nine month period
ended September 30, 1995, are not necessarily indicative of the results that may
be expected for the fiscal year ending December 31, 1995. For further
information, refer to the financial statements and footnotes thereto included in
the Partnership's annual report on Form 10-KSB for the fiscal year ended
December 31, 1994.
Certain reclassifications have been made to the 1994 information to conform
to the 1995 presentation.
Note B - Investment In Joint Venture
The Partnership has a 43% investment in the Fort Worth Option Joint Venture
("Fort Worth"), a 66.7% investment in Northtown Mall Partners ("Northtown"), a
43% investment in Burlington Outlet Mall Joint Venture ("Burlington") and a 50%
investment in Moraine West Carrollton Partners ("Moraine").
The investment in Fort Worth, Northtown and Burlington are included in the
"Equity interest in net liabilities of joint ventures" on the balance sheet.
A purchase agreement was executed on May 8, 1994, for the sale of all of the
Moraine properties to an affiliate of the third party managing agent. The sale
closed on July 21, 1994. Moraine received a net amount of approximately
$2,199,000 in cash after satisfying all indebtedness. Moraine realized a
$140,553 gain on the transaction of which the Partnerships pro rata share was
$70,277.
During the nine month period ended September 30, 1995, all of Moraine's
remaining cash was distributed. Also, during this period, Moraine earned
interest income and incurred a minimal amount of expense.
Note B - Investment In Joint Ventures (continued)
Condensed balance sheet information as of September 30, 1995, for the joint
ventures is as follows:
Assets Fort Worth Northtown Burlington
Cash $ 30,493 $ 290,827 $ 67,889
Other assets 55,732 6,354,276 18,611
Investment properties, net -- 26,963,125 4,384,299
Total $ 86,225 $33,608,228 $ 4,470,799
Liabilities and Partners' Deficit
Fort Worth Northtown Burlington
Other liabilities $ 2,402,690 $ 2,217,985 $ 323,808
Notes payable 2,888,563 51,813,776 6,700,281
Partners' deficit (5,205,028) (20,423,533) (2,553,290)
Total $ 86,225 $ 33,608,228 $ 4,470,799
The condensed profit and loss statements for the three and nine months ended
September 30, 1995 and 1994, for the joint ventures are summarized as follows:
<TABLE>
<CAPTION>
Fort Worth Northtown
Three Months Ended September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenue $ 2,041 $ 176,303 $1,207,032 $1,190,193
Costs and expenses (133,019) (422,302) (2,033,205) (2,026,260)
Net loss $ (130,978) $ (245,999) $ (826,173) $ (836,067)
</TABLE>
Note B - Investment In Joint Ventures (continued)
<TABLE>
<CAPTION>
Burlington Moraine
Three Months Ended September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenue $ 3,369 $ 155,772 $ -- $ 130,952
Costs and expenses (293,425) (295,596) -- (279,153)
Gain on sale of
investment property -- -- -- 323,153
Net (loss) income $ (290,056) $(139,824) $ -- $ 174,952
</TABLE>
<TABLE>
<CAPTION>
Fort Worth Northtown
Nine Months Ended September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenue $ 214,532 $ 573,448 $ 4,294,193 $ 4,335,646
Costs and expenses (456,352) (1,226,186) (6,381,215) (6,424,209)
Bad debt recovery 1,932,975 -- -- --
Loss on sale of
investment property (42,401) -- -- --
Net income (loss) $1,648,754 $ (652,738) $(2,087,022) $(2,088,563)
</TABLE>
<TABLE>
<CAPTION>
Burlington Moraine
Nine Months Ended September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenue $ 223,145 $ 475,822 $ 12,447 $ 1,019,649
Costs and expenses (701,557) (1,025,333) (625) (1,210,804)
Gain on sale of
investment property -- -- -- 323,153
Net (loss) income $ (478,412) $ (549,511) $ 11,822 $ 131,998
Note B - Investment In Joint Ventures (continued)
The Partnership's equity in the losses of the joint ventures was $937,177 and
$1,850,405 for the nine months ended September 30, 1995 and 1994, respectively.
On March 22, 1995, a tenant of the W.T. Waggoner Building purchased the
investment property for $300,000. The net proceeds to Fort Worth at the time of
the sale were $214,749 and the loss on the sale amounted to $42,401. As part of
the sales agreement, $55,420 was held in escrow to cover any unknown outstanding
payables and a mechanic's lien on the property. The General Partner believes
that the escrow is sufficient to cover any outstanding payables and that the
mechanic's lien is without merit.
The Partnership accounts for its 66.7% investment in Northtown, its 43%
investment in Burlington, its 43% investment in Fort Worth and its 50%
investment in Moraine using the equity method of accounting. Under the equity
method, the Partnership records its equity interest in earnings or losses of the
joint ventures; however, the investment in the joint ventures will be recorded
at an amount less than zero (a liability) to the extent of the Partnership's
share of net liabilities of the joint ventures.
Note C - Transactions With Affiliated Parties
The Partnership has no employees and is dependent on the General Partner and
its affiliates for the management and administration of all partnership
activities. The Partnership Agreement provides for payments to affiliates for
services and as reimbursement of certain expenses incurred by affiliates on
behalf of the Partnership.
The following payments were made to the General Partner and affiliates during
the nine months ended September 30, 1995 and 1994:
1995 1994
Property management fees $ 130,081 $115,685
Lease commissions 47,950 --
Reimbursement for services of
affiliates 244,837 410,488
Note C - Transactions With Affiliated Parties
The Partnership insures its properties under a master policy through an
agency and insurer unaffiliated with the General Partner. An affiliate of the
General Partner acquired, in the acquisition of a business, certain financial
obligations from an insurance agency which was later acquired by the agent who
placed the current year's master policy. The current agent assumed the
financial obligations to the affiliate of the General Partner, who receives
payment on these obligations from the agent. The amount of the Partnership's
insurance premiums accruing to the benefit of the affiliate of the General
Partner by virtue of the agent's obligations is not significant.
In July 1993, Angeles Mortgage Investment Trust ("AMIT"), a real estate
investment trust formerly affiliated with Angeles Corporation ("Angeles"),
initiated litigation against Fort Worth and other partnerships which loaned
money to AMIT seeking to avoid repayment of such obligations. The Partnership
subsequently filed a counterclaim against AMIT seeking to enforce the
obligation, the principal amount of which was $2,240,000 plus accrued interest
from March 1993 ("AMIT Obligation").
MAE GP Corporation ("MAE GP"), an affiliate of the General Partner, owns
1,675,113 Class B Shares of AMIT. MAE GP has the option to convert these Class
B Shares, in whole or in part, into Class A Shares on the basis of 1 Class A
Share for every 49 Class B Shares. These Class B Shares entitle MAE GP to
receive 1% of the distributions of net cash distributed by AMIT. These Class B
Shares also entitle MAE GP to vote on the same basis as Class A Shares which
allows MAE GP to vote approximately 37% of the total shares (unless and until
converted to Class A Shares at which time the percentage of the vote controlled
represented by the shares held by MAE GP would approximate 1% of the vote).
Between the date of acquisition of these shares (November 24, 1992) and March
31, 1995, MAE GP declined to vote these shares. Since that date, MAE GP voted
its shares at the 1995 annual meeting in connection with the election of
trustees and other matters. MAE GP has not exerted, and continues to decline to
exert, any management control over or participate in the management of AMIT.
MAE GP may choose to vote these shares as it deems appropriate in the future.
On November 9, 1994, Fort Worth executed a definitive Settlement Agreement to
settle the dispute with respect to the AMIT obligation. The actual closing of
the Settlement occurred April 14, 1995. The Partnership's claim against AMIT
was satisfied by a cash payment to Fort Worth by AMIT totalling $1,932,975 (the
"Settlement Amount") plus interest at closing. These funds were used to pay
down Fort Worth's $5,000,000 note payable to the Partnership (See discussion
below). On August 9, 1995, Fort Worth and Angeles entered into an agreement in
principle regarding the allowance of an amended claim for the deficiency between
the original principal and the Settlement Amount (the "deficiency"). The
amended claim equals 90% of the deficiency, or $276,322. The General Partner
estimates that the amended claim will result in a recovery of approximately 20%.
Note C - Transactions with Affiliated Parties (continued)
As part of the settlement with AMIT, MAE GP granted to AMIT an option to
acquire the Class B Shares. This option can be exercised at the end of 10 years
or when all loans made by AMIT to partnerships affiliated with MAE GP as of
November 9, 1994, (which is the date of execution of a definitive Settlement
Agreement), have been paid in full, but in no event prior to November 9, 1997.
AMIT delivered to MAE GP cash in the sum of $250,000 at closing, which occurred
April 14, 1995, as payment for the option. Upon exercise of the option, AMIT
would remit to MAE GP an additional $94,000.
Simultaneously with the execution of the option, MAE GP executed an
irrevocable proxy in favor of AMIT the result of which is MAE GP will be able to
vote the Class B Shares on all matters except those involving transactions
between AMIT and MAE GP affiliated borrowers or the election of any MAE GP
affiliate as an officer or trustee of AMIT. On these matters, MAE GP granted to
the AMIT trustees, in their capacity as trustees of AMIT, proxies with regard to
the Class B Shares instructing such trustees to vote said Class B Shares in
accordance with the vote of the majority of the Class A Shares voting to be
determined without consideration of the votes of "Excess Class A Shares" as
defined in Section 6.13 of the Declaration of Trust of AMIT.
In 1992, the Partnership loaned Fort Worth $5,000,000 to cover leasing
commissions, tenant improvements, and capital expenditures. The note payable
requires interest at a rate of prime plus 1.5% with monthly interest only
payments through January 1996, at which time the principal is due. In 1992, an
allowance of $2,850,000 was established for the uncollectible portion of this
note receivable. The remaining note receivable balance was fully reserved in
1993. AMIT has since paid $1,961,437 to the Partnership, (see discussion
below), reducing AMIT's note payable to Fort Worth and also Fort Worth's note
payable to the Partnership. In addition, the Partnership recovered a portion of
the note receivable that was previously written off resulting in recognition of
a bad debt recovery on both the Partnership's and Fort Worth's books.
On December 22, 1994, the Partnership entered into an agreement with Fort
Worth and Angeles Income Properties, Ltd. V ("AIPL V"), an affiliate of the
General Partner and the other 57% owner of Fort Worth, whereby Fort Worth
transferred, assigned and delivered to the Partnership all of Fort Worth's
right, title and interests in and to all payment, distributions, profits,
returns of capital and benefits accruing from the repayment by AMIT of the loan
made to AMIT from Fort Worth. This transfer effectively transferred AIPL V's
right, title and interest in and to all payment, distributions, profits, returns
of capital and benefits accruing from the repayment by AMIT of the loan made to
AMIT from Fort Worth. AIPL V has consented to this transfer, assignment and
delivery.
The Partnership may make advances to the affiliated joint ventures as deemed
appropriate by the General Partner. These advances do not bear interest and do
not have stated terms of repayment.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Partnership's investment properties consist of two commercial properties.
The following table sets forth the average occupancy of the properties for the
nine months ended September 30, 1995 and 1994:
Average
Occupancy
Property 1995 1994
Factory Merchant's Mall
Pigeon Forge, Tennessee 91% 93%
Eastgate Market Place
Walla Walla, Washington 94% 93%
The Partnership realized net income of $813,962 for the nine months ended
September 30, 1995, as compared to a net loss of $2,587,533 for the nine months
ended September 30, 1994. The Partnership realized a net loss of $769,248 for
the three months ended September 30, 1995, as compared to a net loss of $915,007
for the three months ended September 30, 1994. The decreased net loss for the
three months ended September 30, 1995, versus the three months ended September
30, 1994, is due to increased revenues (see discussion below). The decrease in
the net loss for the nine months ended September 30, 1995, as compared to the
nine months ended September 30, 1994, is primarily due to bad debt recovery of
$2,111,437 and a decrease in the equity in the loss of the joint ventures (see
discussion below).
The increase in rental revenue for the three and nine months ended September
30, 1995, as compared to the three and nine months ended September 30, 1994, is
a result of an increase in occupancy and rental rates at Eastgate Market Place.
The increase in other income is due to an increase in interest income as a
result of increased cash balances. The decrease in operating expenses for the
nine months ended September 30, 1995, as compared to the nine months ended
September 30, 1994, is a result of 1994's costs including costs associated with
the buyout of an outside management company, which had obtained the management
contract for Factory Merchant's Mall and Burlington Outlet Mall. General and
administrative expense decreased primarily due to a decrease in partnership
accounting, investor services and asset management reimbursements. The increase
in maintenance expense for the three and nine months ended September 30, 1995,
as compared to the three and nine months ended September 30, 1994, is primarily
caused by increased repairs and maintenance at Factory Merchant's Mall in an
effort to enhance the property's curb appeal. Bad debt expense for the three
and nine months ended September 30, 1995, relates primarily to reserves
established for receivables the Partnership has from Fort Worth. Since Fort
Worth no longer has any income producing assets and minimal cash, the likelihood
of collection by the Partnership of such receivables is doubtful, therefore, a
full reserve was established for such amounts. Bad debt recovery as of
September 30, 1995, relates to partial recovery of the note receivable that the
Partnership has from Fort Worth. The entire note receivable ($5,000,000) had
been previously reserved. The $2,111,437 represents proceeds received from Fort
Worth. Tenant reimbursements increased for the three and nine months ended
September 30, 1995, as compared to the three and nine months ended September 30,
1994, due to the tenant reimbursements in 1994 being based on information
provided to the Partnership by the previous management company. Such estimates
were not an accurate reflection of actual reimbursements.
The Partnership's equity in the losses of the joint ventures is $937,177 and
$1,850,405 for the nine months ended September 30, 1995 and 1994, respectively.
The decrease in the equity in loss of joint ventures can be attributed to bad
debt recovery for Fort Worth as a result AMIT's note payment to Fort Worth and
also to decreased losses relating to Burlington. The decrease in the equity in
loss of joint ventures is offset somewhat by a change from net income of
$131,998 for Moraine for the first nine months of 1994 versus net income of
$11,822 for the first nine months of 1995.
As a result of the sale of the W.T. Waggoner Building on March 22, 1995,
Fort Worth realized a considerable decrease in costs and expenses for the nine
months ended September 30, 1995, versus the nine months ended September 30,
1994. Revenue decreased at Burlington for the nine months ended September 30,
1995, versus the nine months ended September 30, 1994, as a result of decreased
occupancy. The decrease in revenue was offset by a large decrease in expenses
primarily caused by decreased occupancy and a decrease in interest expense as a
result of the loan modification agreement (see discussion below). The decrease
in revenue at Moraine for the nine months ended September 30, 1995, versus the
nine months ended September 30, 1994, and the decrease in costs and expenses for
the same period are the result of the sale of the property on July 21, 1994 (see
discussion below).
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of each of its investment properties to
assess the feasibility of increasing rents, maintaining or increasing occupancy
levels and protecting the Partnership from increases in expense. As part of
this plan, the General Partner attempts to protect the Partnership from the
burden of inflation-related increases in expenses by increasing rents and
maintaining a high overall occupancy level. However, due to changing market
conditions, which can result in the use of rental concessions and rental
reductions to offset softening market conditions, there is no guarantee that the
General Partner will be able to sustain such a plan.
At September 30, 1995, the Partnership had unrestricted cash of $3,466,854
compared to $618,958 at September 30, 1994. Net cash from operating activities
increased due to improved operations of the Partnership's investment properties.
Net cash from investing activities increased as a result of distributions
received from Moraine and proceeds received from Fort Worth. Net cash used in
financing activities remained stable from 1994 to 1995.
The sufficiency of existing liquid assets to meet future liquidity and
capital expenditure requirements is directly related to the level of capital
expenditures required at the properties to adequately maintain the physical
assets and other operating needs of the Partnership. Such assets are currently
thought to be sufficient for any near-term needs of the Partnership. The
mortgage indebtedness of $14,541,605, which is secured by the Factory Merchant's
Mall investment property, matures in December 1997 at which time the
indebtedness will be refinanced or the property will be sold. Future cash
distributions will depend on the levels of net cash generated from operations,
refinancings, property sales and the availability of cash reserves. There were
no cash distributions in the first nine months of 1995 or 1994.
The mortgage note payable secured by the Burlington investment property
matured on July 1, 1994. Burlington obtained new financing the terms of which
consolidate all principal, accrued interest, and late charges outstanding on
July 1, 1994, into a new loan amount which will accrue interest at the greater
of 2% or net cash flow as defined in the loan extension agreement. The loan
maturity date had been extended until April 1, 1995. The mortgage holder has
initiated foreclosure proceedings against this property, however, the mortgage
holder has issued a stay of these proceedings in order to give the General
Partner an opportunity to sell the property. The General Partner is not
optimistic that a sale will be consummated within an amount of time satisfactory
to the mortgage holder and therefore anticipates that the mortgage holder will
proceed with the foreclosure.
On March 15, 1991 ("Effective Date"), Northtown and the holder of the
Northtown Mall mortgage note payable entered into an Option Agreement ("Option")
whereby such lender has the right and an option to purchase the Northtown Mall
property on the terms and conditions as set forth in the Option. The purchase
price of the property, as set forth in the Option, is defined as the fair market
value of the property. Such Option can be exercised by written notice by the
lender at any time during any of the thirty day periods occurring immediately
prior to the third, fifth, seventh, ninth, eleventh, thirteenth and fifteenth
anniversaries of the effective date. The first date on which the Option could
have been exercised was March 15, 1994. On February 22, 1994, the lender gave
notice to the Partnership that it intended to exercise this Option. The lender
offered $58,000,000 based on an annual appraisal. Northtown determined that the
fair value as determined in accordance with the loan documents is $62,000,000.
Northtown is negotiating with the lender to retain ownership of the property in
order to protect the Partnership's equity in the property. However, Northtown
cannot presently determine the outcome of such negotiations.
A purchase agreement was executed on May 8, 1994 for the sale of all of the
Moraine properties to an affiliate of the third party managing agent. The sale
closed on July 21, 1994. Moraine received a net amount of approximately
$2,199,000 in cash after satisfying all indebtedness. Moraine realized a
$140,553 gain on the transaction of which the Partnerships pro rata share was
$70,277.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In July 1993, Angeles Mortgage Investment Trust ("AMIT"), a real estate
investment trust formerly affiliated with Angeles Corporation ("Angeles"),
initiated litigation against Fort Worth and other partnerships which loaned
money to AMIT seeking to avoid repayment of such obligations. The Partnership
subsequently filed a counterclaim against AMIT seeking to enforce the
obligation, the principal amount of which was $2,240,000 plus accrued interest
from March 1993 ("AMIT Obligation").
MAE GP Corporation ("MAE GP"), an affiliate of the General Partner, owns
1,675,113 Class B Shares of AMIT. MAE GP has the option to convert these Class
B Shares, in whole or in part, into Class A Shares on the basis of 1 Class A
Share for every 49 Class B Shares. These Class B Shares entitle MAE GP to
receive 1% of the distributions of net cash distributed by AMIT. These Class B
Shares also entitle MAE GP to vote on the same basis as Class A Shares which
allows MAE GP to vote approximately 37% of the total shares (unless and until
converted to Class A Shares at which time the percentage of the vote controlled
represented by the shares held by MAE GP would approximate 1% of the vote).
Between the date of acquisition of these shares (November 24, 1992) and March
31, 1995, MAE GP declined to vote these shares. Since that date, MAE GP voted
its shares at the 1995 annual meeting in connection with the election of
trustees and other matters. MAE GP has not exerted, and continues to decline to
exert, any management control over or participate in the management of AMIT.
MAE GP may choose to vote these shares as it deems appropriate in the future.
On November 9, 1994, Fort Worth executed a definitive Settlement Agreement to
settle the dispute with respect to the AMIT obligation. The actual closing of
the Settlement occurred April 14, 1995. The Partnership's claim against AMIT
was satisfied by a cash payment to Fort Worth by AMIT totalling $1,932,975 (the
"Settlement Amount") plus interest at closing. On August 9, 1995, Fort Worth
and Angeles entered into an agreement in principle regarding the allowance of an
amended claim for the deficiency between the original principal and the
Settlement Amount (the "deficiency"). The amended claim equals 90% of the
deficiency, or $276,322. The General Partner estimates that the amended claim
will result in a recovery of approximately 20%.
As part of the above described settlement, MAE GP granted to AMIT an option
to acquire the Class B Shares. This option can be exercised at the end of 10
years or when all loans made by AMIT to partnerships affiliated with MAE GP as
of November 9, 1994, (which is the date of execution of a definitive Settlement
Agreement), have been paid in full, but in no event prior to November 9, 1997.
AMIT delivered to MAE GP cash in the sum of $250,000 at closing, which occurred
April 14, 1995, as payment for the option. Upon exercise of the option, AMIT
would remit to MAE GP an additional $94,000.
Simultaneously with the execution of the option, MAE GP executed an
irrevocable proxy in favor of AMIT the result of which is MAE GP will be able to
vote the Class B Shares on all matters except those involving transactions
between AMIT and MAE GP affiliated borrowers or the election of any MAE GP
affiliate as an officer or trustee of AMIT. On these matters, MAE GP granted to
the AMIT trustees, in their capacity as trustees of AMIT, proxies with regard to
the Class B Shares instructing such trustees to vote said Class B Shares in
accordance with the vote of the majority of the Class A Shares voting to be
determined without consideration of the votes of "Excess Class A Shares" as
defined in Section 6.13 of the Declaration of Trust of AMIT.
Additionally, Angeles either directly or through an affiliate, maintained a
central disbursement account (the "Account") for the properties and partnerships
managed by Angeles and its affiliates, including the Registrant. Angeles caused
the Partnership to make deposits to the Account ostensibly to fund the payment
of certain obligations of the Partnership. Angeles further caused checks on
such account to be written to or on behalf of certain other Partnerships.
However, of these total deposits, at least $81,263 deposited by or on behalf of
the Partnership was used for purposes other than satisfying the liabilities of
the Partnership. Accordingly, the Partnership has filed a Proof of Claim in the
Angeles bankruptcy proceedings for such amount. However, subsequently the
General Partner of the Partnership has determined that the cost involved to
pursue such claim would likely exceed any amount received, if in fact such claim
were to be resolved in favor of the Partnership. Therefore, the Partnership
withdrew this claim on August 9, 1995.
The Registrant is unaware of any other pending or outstanding litigation that
is not of a routine nature. The General Partner of the Registrant believes that
all such pending or outstanding litigation will be resolved without a material
adverse effect upon the business, financial condition, or operations of the
Partnership.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
b) Reports on Form 8-K:
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ANGELES INCOME PROPERTIES, LTD. IV
By: Angeles Realty Corporation II
General Partner
By: /s/Carroll D. Vinson
Carroll D. Vinson
President
By: /s/Robert D. Long, Jr.
Robert D. Long, Jr.
Controller and
Principal Accounting Officer
Date: November 13, 1995
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Angeles
Income Properties Ltd. IV 1995 Third Quarter 10-QSB and is qualified in its
entirety by reference to such 10-QSB.
</LEGEND>
<CIK> 0000763049
<NAME> ANGELES INCOME PROPERTIES LTD. IV
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 3,466,854
<SECURITIES> 0
<RECEIVABLES> 426,021
<ALLOWANCES> 110,267
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 22,557,667
<DEPRECIATION> 10,173,794
<TOTAL-ASSETS> 17,828,011
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 14,541,605
<COMMON> 0
0
0
<OTHER-SE> (14,128,271)
<TOTAL-LIABILITY-AND-EQUITY> 17,828,011
<SALES> 0
<TOTAL-REVENUES> 2,800,421
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,049,282
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,116,317
<INCOME-PRETAX> 813,962
<INCOME-TAX> 0
<INCOME-CONTINUING> 813,962
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 813,962
<EPS-PRIMARY> 6.05
<EPS-DILUTED> 0
<FN>
<F1>
The Registrant has an unclassified balance sheet.
</FN>
</TABLE>
